If you walked through the Marunouchi district in Tokyo this morning, you probably felt a weird mix of electric excitement and genuine "wait, what happens next?" anxiety. It’s January 17, 2026, and the Japanese markets are basically vibrating. We aren't just talking about a little bump in the Nikkei; we are witnessing a full-on collision between aggressive politics and cold, hard market reality.
Honestly, the term "Takaichi Trade" is the only thing anyone is talking about. Prime Minister Sanae Takaichi—the country’s first female leader and a self-described disciple of the late Shinzo Abe—is getting ready to pull the trigger on a snap election. She wants a mandate for a massive spending spree.
But here’s the kicker: the yen is currently screaming for help.
Earlier this week, the currency tanked to 159.45 against the dollar. That is the weakest it’s been in 18 months. While exporters usually love a weak yen, we've reached a point where it's just making everything too expensive for the average person in Tokyo or Osaka. On Friday, Finance Minister Satsuki Katayama basically told the world that Japan is ready to intervene. She’s been chatting with U.S. Treasury Secretary Scott Bessent, and the vibe is clear: they might start buying yen to stop the bleeding, possibly as early as Monday, January 19, during the U.S. holiday.
The 5-Trillion Yen Gamble
The biggest headline in japan business news today is Takaichi’s plan to suspend the sales tax on food.
Think about that for a second. That is an 8% levy. Scrapping it would leave a 5-trillion yen ($31.6 billion) hole in the government’s annual revenue. The Mainichi newspaper broke the story late Friday, and it’s sending shockwaves through the LDP (Liberal Democratic Party).
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It’s a classic populist move. You want to win an election? Lower the price of rice and miso. But bond investors? They are freaking out. They are demanding much higher premiums to hold Japanese government debt because they see the "inflation dragon" waking up.
- Nikkei 225 Performance: Closed Friday at 53,936.17.
- The Bull Case: Strategists like Neil Newman from Astris Advisory think a Takaichi win could push the Nikkei up another 5% because of a "capex boom" in tech and defense.
- The Bear Case: If the yen keeps sliding, it kills consumer spending. People can't buy AI-powered gadgets if they can't afford lunch.
AI, Chips, and the 2026 Budget Shift
While the politicians are fighting over taxes, the Ministry of Economy, Trade and Industry (METI) is quietly changing the blueprint of Japan's entire economy. They are planning a massive 50% budget hike for the 2026 fiscal year.
We’re talking about ¥3.07 trillion.
The coolest part? They aren't just doing "one-off" stimulus packages anymore. They are moving to "base" funding. This means the money for Rapidus (Japan's big bet on making high-end 2-nanometer chips) and domestic AI development is now a permanent fixture in the budget.
Specifically, ¥150 billion is earmarked for Rapidus, and ¥387.3 billion is going straight into AI. We’re seeing a shift from "maybe we should do tech" to "we are a tech-first nation."
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You can see the results already. At CES 2026 earlier this month, Japanese startups like Innovative Space Carrier and Tokoshie stole the show. Tokoshie is doing some wild stuff with AI-native conversational CAD for 3D printing. It’s basically "Star Trek" replicator vibes but for real-world manufacturing.
The Meloni Meeting and Global "Special Partnerships"
It wasn't just domestic news today. Italian Prime Minister Giorgia Meloni is in Tokyo, and she’s been meeting with the "Who’s Who" of Japan Inc.
I’m talking about Koji Sato from Toyota, Kenichiro Yoshida from Sony, and Toshiaki Higashihara from Hitachi. These are companies with a combined turnover of over EUR 1,000 billion.
The two countries just upgraded their relationship to a "special strategic partnership." What does that actually mean for your portfolio? It means co-developing next-gen fighter jets and securing supply chains for critical minerals. Japan is no longer just looking at the U.S. or China; it’s building a "Euro-Pacific" bridge to hedge against global trade wars.
What Most People Get Wrong About the BOJ
There’s a massive misconception that the Bank of Japan (BOJ) is going to hike rates aggressively to save the yen.
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Kinda unlikely.
Governor Kazuo Ueda is in a tough spot. If he hikes rates too fast, he crushes the "Takaichi Trade" growth. If he doesn't, the yen dies. Most analysts (about 48% of them in the latest Bloomberg survey) think the next hike isn't coming until July.
For now, the rate is sitting at 0.75%—the highest since 1995, sure, but still a joke compared to the U.S. or Europe. Expect the BOJ to hold steady at the meeting on January 22-23. They’ll likely keep the benchmark at 0.75% and just "monitor" the situation, which is central bank speak for "holding our breath and hoping for the best."
Why This Matters for Your Business Decisions
If you are looking at japan business news today and wondering what to actually do, keep your eye on the "Human Capital 100" index.
Japan is actually leading the world in corporate climate leadership right now. According to CDP data released this week, 22% of Japanese companies have hit "climate leadership" status, beating out the UK and the EU.
Companies like Mitsubishi are also making huge moves abroad to diversify. Mitsubishi just dropped $5.2 billion to buy Aethon U.S. gas assets. They know the domestic market is shrinking, so they are buying up "real world" energy assets in America.
Actionable Takeaways for the Week Ahead
- Watch the 160 Level: If the USD/JPY pair crosses 160 on Monday/Tuesday, expect a massive "flash" intervention from the Ministry of Finance. This will cause a temporary, violent spike in the yen.
- Tech Stocks vs. Consumer Goods: Focus on the "METI-backed" sectors. Semiconductors (Rapidus partners) and AI infrastructure are the safest bets because their funding is now baked into the national budget. Avoid retailers that rely on imported goods until the sales tax situation is clarified.
- The Election Date: Takaichi is eyeing February 8 for the snap election. Expect the Nikkei to remain highly volatile but generally bullish until the vote, as "hope" usually outperforms "reality" in the short term.
- Corporate Debt: It’s a banner year for yen-denominated corporate bonds. If you’re looking for yield without the extreme volatility of the stock market, Japanese corporate debt is actually looking pretty attractive compared to JGBs (government bonds).
The "lost decades" narrative is officially dead. Japan is expensive, it’s aggressive, and it’s finally willing to gamble. Just make sure you’re not the one left holding the bag if the inflation bet goes south.